One of the concepts I spend a fair bit of time on in my book “Rip Out the Core” is what I call the point of diminishing returns. You do not have to be an economist to recognise the pattern. At some stage in a long, complex transformation, the relationship between time, cost and value starts to break down. You are still spending money. You are still burning people’s energy. But you are no longer moving the bank meaningfully forward.
Most large programmes hit this point. The problem is that very few recognise it while it is happening.
In the early phases, everything looks promising. Fresh strategy decks. New logos on the vendor slide. Steering committees brimming with optimism. There is real value to be captured in simply getting organised, cleaning up old messes and building the first slices of modern capability. The early wins are genuine.
Then reality starts to land.
You discover the classic unknown unknowns, the undocumented dependencies, the edge cases that were never captured in requirements, the integrations that “should have been simple”. Regulators ask harder questions. Business priorities shift. Key people move on. The wider organisation starts to tire of living inside a programme whose benefits still feel mostly theoretical.
If you are not careful, you get trapped in a strange limbo. Too far in to stop. Not far enough to make a difference. You keep investing because you feel you must, but the gap between the original vision and the actual trajectory grows wider every quarter.
That is the point of diminishing returns.
Why does this matter so much in core modernisation?
Because time is not a neutral backdrop. The longer you take, the more the world around you changes. A five‑year programme launched in 2019 was not designed for a world of generative AI, agentic banking and embedded finance at today’s pace. By the time you reach your planned end state, the goal posts have moved. Again.
That is why I am deeply suspicious of any roadmap that treats transformation as a fixed, multi‑year march toward a static destination. It assumes a level of certainty we simply do not have. It also ignores the way risk accumulates over time. The longer your dependencies, the more opportunities there are for something to go wrong.
The point of diminishing returns is not just about money. It is about optionality. Once your programme becomes too big to fail politically, it also becomes too big to adapt. You cannot change vendors without causing uproar. You cannot pivot scope without unpicking years of planning. You cannot respond to a new regulatory requirement without blowing up your timelines.
A capability‑led, progressive approach is my answer to this. Instead of betting everything on a single monolithic programme, you define clear, business‑anchored capability waves. Each wave includes a proper Blueprint, a Construct phase where you actually build and deploy something, and a Harden phase where you scale and embed it. Then you reassess. Not just the next backlog, but the strategy itself.
This is about acknowledging uncertainty and designing your transformation so it can change its own mind. You set principles that endure, such as your definition of core and your architectural stance. But you give yourself the freedom to adjust which capabilities you prioritise, which partners you work with and how far you go in each cycle.
In the kitchen, the equivalent was choosing to renovate in zones rather than redesigning the entire house at once. First the ruined area had to be made safe and functional. Then we could decide how far to extend, what appliances to upgrade and what we were prepared to live with for another few years. That did not mean we lacked a vision for the end state. It meant we refused to mortgage the present to a fantasy.
For banks, spotting the point of diminishing returns is both a diagnostic and a discipline. If your core programme has turned into a self‑perpetuating entity with no clear path to delivering live capabilities, you are already there. If your end state looks eerily similar to the slide you presented four years ago despite a radically different external environment, you are probably there too.
In the book I dig deeper into how you can identify and avoid this trap. For now, I would simply encourage you to look at your biggest programmes and ask a hard question. Are we still creating options, or are we closing them down?
If the honest answer makes you uncomfortable, you are exactly the kind of reader I had in mind when I wrote about this. The goal is not to criticise the past, but to help you design a future where transformation remains a means to an end, not an end in itself.
My book “Rip Out The Core” will be published during the first half of 2026. Want to stay up to date on progress and timeline, then why not sign up for my newsletter?
